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Osborne: 'Let's not pretend there's a housing boom' | Osborne: 'Let's not pretend there's a housing boom' |
(34 minutes later) | |
Chancellor of the Exchequer George Osborne has denied that the UK housing market is overheating. | Chancellor of the Exchequer George Osborne has denied that the UK housing market is overheating. |
Answering questions at the annual meeting of the Institute of Directors he said: "Let's not pretend there's a housing boom". | Answering questions at the annual meeting of the Institute of Directors he said: "Let's not pretend there's a housing boom". |
The chancellor pointed out that housing sales and mortgage approvals are still well below the boom years. | The chancellor pointed out that housing sales and mortgage approvals are still well below the boom years. |
In August, UK house prices rose at the fastest rate since June 2010, according to the latest survey by the Halifax. | In August, UK house prices rose at the fastest rate since June 2010, according to the latest survey by the Halifax. |
Vigilance | |
The chancellor said that he, along with the Bank of England, was "alert to the risks" of a housing boom. | |
He said that the Bank of England had a responsibility to look at risks as they emerge in the economy "like asset price bubbles". | |
Last week, Bank of England governor Mark Carney told MPs "we do need to be vigilant" on house prices. | |
Addressing the Treasury Committee, he said the central bank had a "considerable range of policy options" that would start with "more intensive supervision of mortgage lending". | |
However, Mr Carney said that not all of the country had seen a recovery in house prices. | |
He stressed that across the nation, house prices in many areas were only at two-thirds or three-quarters of pre-crisis levels. | |
Government support | |
There have been some concerns that government measures could lead to a housing bubble. | |
Two government schemes are having an impact on the mortgage industry and housing market. | |
Under the Funding for Lending Scheme (FLS), banks and building societies are able to borrow money relatively cheaply from the Bank of England, providing they lend that money out again. | |
FLS is widely credited with bringing down mortgage rates since it started just over a year ago. | |
Meanwhile the Help to Buy scheme, which began in April, allows buyers of new-build homes to put down a 5% deposit and take out a government loan for up to 20% of the value of the property. | |
From January, the scheme will be extended to help buyers of existing homes. | |
Business Secretary Vince Cable has questioned whether the second part of this scheme should go ahead. |
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